I am today submitting to the Congress a proposal which will
correct a serious flaw in the social security system's formula
for determining benefits. The new benefit formula contained in my
proposal will prevent social security payment levels from being
distorted by unusually high periods of inflation while helping to
protect the financial integrity of the system itself.

This proposal is the last of three components of my 1977
budget and legislative programs intended to ensure a secure and
viable social security system. My program calls for a full cost-of-living
increase for all beneficiaries, scheduled to take effect in
checks sent out in July of this year.

It calls for an increase in social security payroll
contributions by three-tenths of 1 percent for both employers and
employees. This increase would remedy the immediate short term
financing problems facing social security. It would stop the
drain on the trust funds which are now expected to pay out about
$4 billion more in benefits each year than they take in. This
correction would cost no employee more than $1 per week in
additional contributions.

The third component of my program is the legislation I am
transmitting today to correct a serious flaw in the social
security benefit structure. If left unchanged, this flaw could
damage the underlying principles of social security and help
create severe long-range financial pressures on the system. My
proposal would eliminate this flaw and be a major step towards
resolving the long-range financial problem. It would help
stabilize the system and permit sufficient time for careful and
thorough analysis of the remaining future financial pressures.

Both of these proposals are vital. While I am very happy that
a full cost-of-living increase will be included in July's social
security checks, I regret to say that the Congress has avoided
its responsibility to provide a means of paying for the full cost
of the system.

If we are successfully to preserve the financial integrity of
the social security system, we need prompt action on both of my
proposals. I strongly urge the Congress to move immediately and
without further delay to enact both of them into law.

Note: The President spoke at 10:24 a.m. in the Oval Office
at the White House.